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Technology Wins

Economics, not politicians, will determine what tools are best.

Fortnightly Magazine - March 2012

power from next door or the next state. And that, according to DG advocates, is anti-competitive and ultimately detrimental to the public interest.

Of course it’s also true that variable and non-dispatchable sources like PV rely on the grid for backup power when the sun isn’t shining—and that’s also true for remotely sited solar and wind projects, which lean on long-haul assets 100 percent of the time. But in the case of big central facilities, utilities can earn returns on their transmission investments. DG, on the other hand, erodes the equity value of high-voltage infrastructure—unless we can work DG into the investor-owned utility business model. As Crocker says, “Pigs smell like money if they’re your pigs.”

Indeed, some utilities are trying to corral the wild livestock of DG by experimenting with rooftop PV leasing and other approaches that keep the utility firmly in the value chain. But most such initiatives, like Reliant Energy’s Solar Solutions program (see “ Solar Leasing Shines ”), remain small. As technology advances and systems get ever cheaper, upstart companies might be better positioned than utilities to capture a share of this growing market, because they won’t be constrained by Edison-era economics.

That doesn’t mean utilities can’t benefit from expanding DG, if the regulatory framework allows it. In the long run, whether utilities view DG as a threat or an opportunity might depend on whether policy makers are more interested in delivering the best possible value to customers—or preserving a buggy-whip business.